Neil Smith, Paragon Bank's head of surveyors shares his insight on the highly competitive and often challenging landscape of student rentals.
The student rental market remains a vibrant sector, particularly in prime university locations, where demand for quality accommodation is strong. It can also offer attractive yields for landlords, with our own lending data showing that student property offers an average yield of 7%, versus 6.6% for non-student property.
Although rent increases have moderated in many areas, the best properties continue to command premium prices. Landlords with a deep understanding of the student market are finding success by adapting to evolving tenant preferences and regulatory requirements. Here are five top tips for landlords looking to let to students.
Prioritise location
It may seem obvious, but location is key when letting to students. Proximity to the university and local amenities significantly increases your property’s appeal. The most sought-after student accommodation is located within walking distance of the university, near public transport links and close to shops, cafes and social venues. Experienced student landlords even know which side of the street is more popular with their target tenants.
Fringe areas with uncertain rental demand are generally reflected in landlord returns as they experience longer void periods and greater difficulty in attracting tenants.
Location also extends to the quality of the university. Our recent study found that 13 of the top 15 yielding student cities boasted a Russell Group university.
Focus on quality and layout
The stereotype of student digs seen in 'The Young Ones' is as outdated as the 80s sitcom that popularised it. Run-down, poor-quality accommodation won’t cut the mustard with local authority enforcement officers, let alone students.
Students are increasingly discerning, and larger, well-designed rooms are in high demand. Properties that combine comfort with practicality—such as those offering larger bedrooms and en-suite facilities—tend to command higher rents.
Avoid maximising the number of small rooms, as students often prefer fewer, larger rooms, especially if they come with en-suite bathrooms. The days of splitting one large room into two are over. Any property offering more than six rooms generally is less popular as the trend for larger student groups has also diminished in recent years.
This approach also appeals to post-graduate students and young professionals, broadening your potential tenant base.
To remain competitive, landlords should ensure that their properties are equipped with modern amenities. High-speed internet, spacious communal areas, and well-equipped kitchens are essential to attract tenants. Décor should be modern and appealing, with attention to detail in all aspects of the living space. By investing in quality fittings and furniture, you can position your property at the top end of the student rental market.
Bringing a poor-quality home to the market will significantly limit your tenant appeal. With the growth of the purpose-built student accommodation sector, landlords are now facing tougher competition than in previous generations, so it’s important they stay up to speed with the latest trends and student demands.
Understand your target tenant group
Understanding the different segments of the student population is crucial. For example, international students, especially from countries like China, may prefer PBSA over traditional Houses in Multiple Occupation, although rents are typically higher for this style of property.
On the other hand, domestic students may prioritise properties close to campus and large communal spaces to live with their friends. Tailoring your property to meet the preferences of your target tenant group will help secure tenants more easily.
Also, consider whether there are any secondary markets you could target, such as young professionals if the campus is close to a city centre, or key workers, for example, nurses if close to facilities such as a major hospital.
Plan for energy efficiency and future regulations
With mooted regulations requiring landlords to meet higher energy efficiency standards by 2030, it is important landlords consider the energy performance of their existing properties, or properties they plan to purchase. This could include upgrading insulation, installing energy-efficient appliances, or using smart technology to monitor energy use. Not only will this help reduce utility bills—making your property more attractive to students—but it will also future-proof your investment against regulatory changes.
The Renters’ Rights Bill also includes specific grounds for possession for landlords who let HMO property to students to ensure it is available for the start of the academic year. This only applies to HMOs as currently drafted, so landlords who focus on smaller non-HMO properties should be aware of the rule changes ahead of implementation.